@PureBULL, I am not really upset nor angry with naysayers, but I just wanted to give a true picture of the financial situation of YTL Power, and it was easy to make a comparison with Tenaga who is also in the power generation business and in the Utility sector of Bursa.

One needs to make an objective judgement and assessment of each individual company, not just looking at it being a monopoly or some sort. There is no monopoly or sort in business here. Just look at the US stock market, which company can become a US$1.0 trillion company by being a monopoly? Or which company with US$1.0 trillion market cap has a monopoly business?

I also do not like to see people who have earlier bought in YTLP share to sell cheap at the current moment to these "naysayers" whose job is just to press down the share price. It would be a pity if one let go of its holding of YTLP at this moment when the share price might be about to break up soon.

To be more conservative, I will take the average USEP of SGD158/MWh in Jan-Mar2024 as the selling price of the power export to Singapore.

Potential revenue will be:

100MW x 92h x 24h x 85% x SGD158/MWh = SGD29.6m a quarter

minus cost of generation of RM37.5m a quarter, gross profit would be RM66 million a quarter or RM265 million a year, which looks more palatable with the cost of investment of RM300+m

The 100MW of electricity export to Singapore is just a test project for the larger power export of 2000-4000MW at later stages.

PowerSeraya secured this pilot project of 100MW export to Singapore, and I understand the power export has already started since early Jan 2024. For now YTL Power signed a temporary agreement with Tenaga to secure some green energy produced by Tenaga for the pilot export project until YTLP completes its own solar power plant in Peninsular Malaysia likely in Johor.

I do not know of the tariff for the 100MW pilot export project. I need to make some assumptions here in order to get a sense of the potential earnings. I don't think YTLP could make much earnings currently as it relies on Tenaga to generate the power for export to Singapore, perhaps just a small commission for PowerSeraya as the offtaker on the other side.

But once YTLP ramps up its own solar power farm in Johor, then we can expect decent earnings to be made, assuming that cost of generation for solar power here is say 20 sen/kWh (LSS3/4 winning bid at 16-22 sen/kWh) and electricity selling price to Singapore is at 10% discount to prevailing electricity tariffs there (average USEP at SGD231/MWh in Mar 24, prevailing retails contract price around SGD300/MWh) then we can calculate the gross profit at :

100MW x 92 days x 24h x 85% x SGD208-270/MWh = SGD39-50 million revenue a quarter

Cost of generation = 100MW x 92d x 24h x 85% x RM0.20/kWh = RM37.5m a quarter

So gross profit could be RM99m - RM137 million a quarter.

It may look too optimistic on the selling price (i.e. 10% discount to USEP/ prevailing retail contract price) for a pilot project, but that may well be the case as the pilot project is only for 2 years. Any developer will need to recoup the investment costs on putting new solar power farm within 2-5 years. FYI, the cost of installing 100MW solar power farm could cost RM300 million excluding land cost.

The 1st phase co-location data centre with SEA Group is about 32MW in size. I have not much info on its potential earnings but I have read a couple of analysts' reports that projected for pretax earnings of RM100 million a year from the 1st phase data centre.

I will just take it as face value for now, i.e. RM100m PBT for the 1st phase 32MW data centre with SEA Group.

The balance 16MW of co-location data centre, if secured later, will contribute about half of the earnings of the 1st phase, I guess, i.e. RM50m PBT a year for the balance 16MW data centre.

MR. OTB, I will do some best guess here on earnings projection for Wessex for next few quarters:

In Q2 FY2024 (Dec 2023), Wessex registered revenue of RM1.19b and pretax loss of RM69.5m. CIMB and some other analysts reported that Wessex secured a 11% hike in water tariffs for regulatory year starting from 1 April 2024. Hence I expect quarterly revenue to increase by 11% or RM120 million, assuming operating costs remain the same, Wessex should report a PBT of RM50 million for Q4 FY2024 (June 2024). To note that Wessex made a very high provision for index linked bonds of RM155 million in Q2 FY24. As the inflation in the UK has been coming down since Jan 24 to around 3.2% in Jan 24 and 3.1% in Feb 24, I expect the provision for index linked bonds to be smaller going forward.

My estimate is that if inflation rate in the UK remains at around 3% p.a., provisions for index linked bonds will be around GBP25-30 million a year. So for each quarter going forward, I expect provision for index linked bonds to be around GBP7 million a quarter or RM42-45m/qtr.

As such, there is a chance for Wessex to report a PBT of RM50m + (155-45)m = RM160 million for Q4 FY24, and then in each 3 quarters thereafter, i.e. Q1-Q3 FY2025 (Sep 24, Dec 24 & Mar 25).

For period starting from 1 April 2025, Wessex will enter the next 5-year regulatory period AMP8 (Apr 2025- Mar 2030). It will depend on the final determination of Ofwat, the water authority in the UK, in Nov 2024 on the approved water tariffs based on the proposed capex and opex plan submitted by Wessex.

As all water companies in the UK have submitted substantially higher capex programmes for the next 5 years in order to meet the more stringent environmental requirements, market expectation is for Ofwat to approve the capex plans substantially unchanged from what the water companies have submitted, or just taper down slightly.

As a result, the Regulatory Capital Value (RCV) of Wessex is expected to expand substantially from currently GBP4.0 billion to over GBP7.0 billion by 2030.

As the allowed return on capital is calculated by WACC x RCV, hence the operating profit of Wessex is expected to jump up substantially when the massive capex programmes get carried out and RCV expands every year.

I think I have made some guess in my earlier article on the potential earnings of Wessex for 2025-2030. I just calculate it again below:

Assuming proposed capex of GBP3.5b is approved and capex of GBP700m is spent every year and RCV will expand by GBP300m in 2024, then RCV will expand to GBP4.3b by 31 Mar 2025. Assuming a WACC of 5.0% ( it is fair as current fund rate in the UK is 5.5% and current average borrowing rate of Wessex is around 4.0%), the allowed revenue for return on capital for RY2026 (regulatory year from Apr 2025 to Mar 2026) will be:

5.0% x GBP4.3bn = GBP215 million

Total debts at Wessex will go up to around GBP3.3b by 31 Mar 2025, so interest expense will be about:
3.9% x GBP3.3bn = GBP129 million for RY2026

Assuming provision for index linked bonds stabilises at GBP25-30m a year, Wessex may report a PBT of GBP215 - 129 - 30 = GBP56-60 million OR ~RM350 million for RY2026.

Come Mar 2026, RCV will expand to GBP5.0b and debts to GBP3.75b, so allowed return on capital revenue will be:
GBP5.0 x 5.0% = GBP250 million
interest expenses will be 3.9% x GBP3.75 = GBP146m

so PBT for RY2027 may be GBP250 - 146 - 30 = GBP74-79 million or ~RM460 million.

YTL Power's debts at the subsidiaries are ring-fenced at the subsi level and have no recourse to the parent company, but it is not the case for Tenaga and many other GLCs and other companies where any default of a debt or bond will affect the credit rating of the parent company.

For YTLP, the debts at the subsi are serviced with the operating cashflows of each subsi company, and if any subsi debt were not being serviced well, the lenders could not go after the parent company.

For each subsi company, the operating cashflows are so strong that servicing respective debt is not an issue at all. For example at PowerSeraya, operating cashflows top SGD900 million a year, and it has no issue of servicing interest expenses of SGD25m a year. In fact, PowerSeraya has been paring down its debts by over SGD1.2 billion in past 2 years.

No use for a company with monopoly business if not well managed. It can go burst too if not controlling capex spent and debt mountains effectively. How much is the free cashflows of Tenaga? Effectively zero. It is using borrowed money to pay out dividends while holding onto billions of trade receivables pending collection from the government.

Just because it is a GLC and it will not fall?? Think again.

Wasn't MAS monopolising the domestic flights before Air Asia came in?
Wasn't Proton getting billions and billions of grant from the government while having almost monopoly of the entry-level cars before Perodua came in?
Wasn't BHIC monopolising the supply of war ships and combat vehicles to LTAT?
Wasn't Bernas monopolising the import of white rice?
Wasn't Hicom monopolising certain heavy industries in the country before it went burst?

Don't talk nonsense here. There is no monopoly in business here, it is just government protection.

Let me update on YTL Power cashflows and net cash situation based on latest Q2 FY2024 results:

Operating cashflows before working capital changes and capex amounted to RM2.74 billion for the 6 months ended 31 Dec 2023, annualised to RM5.5 billion. Among this, PowerSeraya will contribute over RM3.0 billion of operating cashflows a year to YTL Power, others are steady dividends from Jawa Power and Jordan Power plus shareholders' loan interest income.

Capex for the 6 months amounted to RM1.6 billion, meaning that YTLP had free cashflows of RM1.4 billion for 6 mths, annualised to RM2.8 billion a year.

As of 31 Dec 2023, YTLP had gross cash of RM9.6 billion and total borrowings of RM31.4 billion, or net debt of RM21.8 billion.

I estimate that almost all of the debts are sitting at the various subsidiary level:
Wessex - GBP3.1b or RM18.6b
PowerSeraya - SGD1.0b or RM3.5b
Jordan - USD1.5b or RM7.0b
Yes - RM1.0b
YTL Comms/data centre - RM1.3b

Total debts at subsidiaries RM31.4bn

This means that at the holding company level, YTL Power actually has zero debt. The RM9.6b gross cash at the balance sheet, the bulk of which is sitting at subsidiary level too for general working capital purposes and for future capex plans. I estimate that at the holding company level, there is a minimum of RM2.0 billion net cash that YTL Power can deploy for future M&A and new project capex.

So to some parties claiming of high debts at YTL Power, please study the balance sheet again.

Why are they not saying high debts at Tenaga?? FYI, Tenaga had total RM61 billion of debts and gross cash of RM19.3b as of 31 Dec 2023. Tenaga is required to spend a total of RM51b for normal grid capex over next 5 years to 2030 and additional RM35b for NETX related capex by 2030, so a total of RM86 billion of capex to be spent over next 5-6 years. Where is it going to get the money from? By increasing the electricity bills for everyone here? BY getting bailout grant from the government? from issuing more bonds? by getting more bank borrowings? Please think again and talk with facts and figures.

Resorts World Las Vegas achieved EBITDA of USD195 million in 2023, if revenue grows by 20% in 2024, then it may well achieve EBITDA of USD350 million in 2024.

But it is still not quite enough to turn in a profit as depreciation charge of USD200m and interest expense of USD230m will drag it into a small pretax loss in 2024.

I estimate that it may turn in a profit in 2025 if revenue continues to grow at 10-20% in 2025.

Mr. OTB, noted your rationale above.

In whatever way we calculate it, the earnings potential is going to be huge, very huge.

Mr. OTB, I am not sure when I mentioned an EBITDA margin of 50% for AI data centre, it was not in my last article on YTL Power, it could be weeks ago in this forum when there was not much info available.

Now we have more info - NVidia's AI data centre business had an EBITDA margin of 75% in 2023, and CIMB analyst assumed an EBITDA margin of 65% for YTLP's upcoming AI data centre. I now think that an EBITDA margin of 70% is possible.

On another note, in your calculation of potential net profit from AI data centre, we need to deduct depreciation charge and also interest expenses from EBITDA before we can arrive at pretax profit.

How much depreciation charge will depend on the accounting policy on the appropriate depreciation period to be used on tech assets like Nvidia GPU, physical data centre infrastructure and solar power panels etc. That's the reason why I am not able to do a meaningful estimate of the potential profit contribution from AI data centre without the knowledge of the accounting policy as well as the funding mix / interest rates.

@Permutation, as said before I do not have sufficient info to make good estimates of potential earnings from YTLP AI data centre.

I see that the assumptions used by CIMB analyst in her report dd 22 Feb 2024 are more or less inline with what I have, and hence I tend to believe the earnings projection made by CIMB analyst for YTLP AI data centre business is credible, especially when the report was issued after she met with YTLP management.

Mr. OTB, I need to qualify my following projection that I am not an IT or AI expert but carry out the calculations just from the standpoint of a financial analyst.

I will use the projected capex for the YTL Power's planned 100MW AI data centre project to estimate the number of Nvidia GPUs required. Using the estimated capex figure of US$3.0 billion from CIMB analyst and the announced RM20 billion investment figure from PMX, and taking the expected price tag of US$40,000-45,000 per B200 GPU, I estimate that the 100MW AI data centre will require about:
US$3.0bn/US$40-45k = 70,000 GPUs to
RM20bn/US$40-45k = 100,000 GPUs

If I use CIMB analyst's figure for GPU rental rate of US$2.50/hour (CoreWeave averaged at US$2.23/hr, Lambda at US$2.49/hr and Fluidstack at US$2.89/hr), and assuming 90% usage rate, the 100MW AI data centre with 70,000 GPUs may generate revenue of:

70,000 x US$2.50/hr x 8760 x 90% = US$1.38 billion a year

Again this is all temporary disruption and is based on hearsay, I have no way to prove it.

Just take note of the possibility of such things happening when a call warrant expires.

I don't understand the question - short sale tool??

But generally when a call warrant is expiring, the issuing bank will try to press down the mother share in the last 5 days before expiry so that the settlement price for the call warrant is lowered, if the IB has not hedged the call warrants issuance with sufficient mother shares.

If the IB ahs hedged enough, then they don't have to worry about the mother share price upon call warrant expiry.

In the case of the last call warrant expiring on 29 Feb, we saw a large chunks of selling on the mother shares, as I was told that the IB who issued that call warrant dumped almost all its holdings of YTL Power shares used to hedge against the call warrant on 29 Feb, as it did not intend to issue any more new call warrant on YTLP.

Hong Leong analyst has made a non-biased and professional assessment of the earnings prospect of YTLP, projecting a net profit of RM3.327b (EPS of 41.1 sen) for FY24, RM3.794b (EPS of 46.8 sen) for FY25 and RM3.896b (EPS of 48.1 sen) for FY26.

These are very close to what I have projected earlier - EPS of 40-42 sen for FY24 and 45+ sen for FY25 incorporating only 6 months (Jan-Jun 25) of contribution from AI data centre.

Hong Leong analyst Daniel Wong gave a very good update report on YTL Power this morning, reiterating BUY call with a tp of RM5.55.

After getting a management update, he commented on the latest AI venture development: "The mew setup YTL AI Cloud, in deploying and managing NVIDIA's latest Grace Blackwell-powered DGX Cloud (adopting GB200 GPUs), indicates NVIDIA's strong support of YTLPI's digital venture."

On Wessex Waters, he mentioned that the announced 11-12% average tariff hike for wholesale and 12-14% tariff hike for household effective Apr 2024 will revert Wessex into black in 4QFY2024 and a full year turnaround in FY25. It is also estimated of a further 15% increment in average tariff based on upcoming AMP8 (2025-2030) proposal for higher GBP3.5 billion capex spending (vs. GBP1.5bn in AMP7) and higher allowable real return (WACC based on CPIH) of 4.39% (vs 2.96% in AMP7). Hence he expects an even stronger results from FY26 onwards with accelerating RCV asset size (GBP4.2bn as at end-2023).

On PowerSeraya, he stated that Singapore's retail electricity prices continued to trend higher for the past few months (with actual data from major electricity retailers) despite the drop in average wholesale USEP. He said the management had guided that 75-80% of PowerSeraya business is driven by retail segment with another 10-15% by SP Group (i.e. vesting contracts with fixed margin). Hence the exposure to the wholesale USEP segment is just 5-10%.

"While YTLP does not have direct peers, we are still able to relate YTLP's earnings to Keppel, Sembcorb Industry and First Pacific with regards to the Singapore utilities sector. Bloomberg concensus has been estimating increasing earnings for Keppel, Sembcorp and First Pacific for FY12/24-26, contrary to YTLP's concensus estimating deteriorating earnings profile for FY06/24-26. We believe the concensus estimates is mainly due to concensus' lack of understanding of Singapore's utilities structure and consequently, earnings sustainability of YTLP."

This clearly supports my earlier argument that PowerSeraya's earnings will sustain into 2026 as there will be no new capacity supply in Singapore. Local analysts' projection of substantially lower earnings for PowerSeraya in FY06/24-26 is due to the lack of understanding of the Singapore electricity market and structure. They have obviously over-played the "normalisation" of PowerSeraya earnings.

No doubt Singtel may roll out its own GPU-powered cloud computing services in Singapore (or Thailand and Indonesia) but land is scarce in Singapore and energy cost is high. YTL Power will have cost advantage over Singtel in rolling out similar AI cloud services at its Kulai data centre park.

The AI data centre business is a big pie, large enough for Singtel and YTL Power to have substantial market share in this growing market segment. As Nvidia CEO Jensen Huang mentioned in his key note address yesterday, Nvidia was looking to expand the US$250 billion AI data centre business over the next few years with its partners like Singtel and YTL Power.

Singtel is aiming to roll out a total of 100MW of AI data centres in Singapore, Thailand and Indonesia over next few years, and YTL Power is also aiming for 100MW of AI data centre to be commissioned over next few years. Using CIMB analyst's data, each of these 100MW AI data centres may cost about US$3.0 billion each, so these 2 projects only make up US$6 billion of AI data centre jobs, a small fraction of the US$250 billion AI data centre market size.

Microsoft and Amazon may have their own data centres, but often it is more cost effective for them to outsource the building of AI data centre infrastructure to third parties like CoreWeave, Lambda or YTL Power.

FYI, Microsoft signed a multi-year contract with CoreWeave last June to build an AI data centre in the US. CoreWeave offers Nvidia GPUs that other companies like Microsoft rent out. CNBC has learned from people with knowledge of the matter that Microsoft has agreed to spend potentially billions of dollars over multiple years on cloud computing infrastructure from startup CoreWeave.

Similarly, YTL Power has the advantage of having the suitable site close enough to Singapore, large enough for installing the required solar power, and having the access to Nvidia's latest GB200 GPUs which will hit the market later this year. Cloud service providers like Microsoft, Amazon and Google will find it more cost effective and time effective to rent out from YTL Power data centre park in Kulai, rather than looking for land, getting local authority approvals, appointing sub-contractors to erect the basic infrastructure, mobilising own or third party teams to install the data centre equipment, and worst of all not having guaranteed access to Nvidia GPUs.

With the agreement with Nvidia hours ago to set up YTL AI Cloud, and with Jensen Huang promoting this new site at Kulai, I am confident that YTL Power will be able to secure some major customers for its AI data centre very soon.

YTLPower will use the most powerful AI chip GB200 which was just launched by Nvidia hours ago. These GB200 GPUs may be 30x faster than H100 GPUs and consumer 25% less energy.

YTL Power will be among the first to deploy this latest GPU in Southeast Asia at its Kulai data centre park. It will definitely help to attract MNCs like Microsoft and Amazon to utilise its AI data centre in Kulai.

@Permutation, I am not sure if the technical chart reading on YTLP given to you was indeed from iCap Tan Teng Boo. Recently there have been lots of scam groups pretending to be the investment gurus such as Tan Teng Boo, Cold Eye or Koon YY, advertising online to get people into their chat group by sharing fake investment advice. Just beware.

@Permutation, for FY2025, EPS of 50 sen may be on the high side as the AI data centre division will only start contributing earnings from 2H 2024.

Assuming existing business operations from PowerSeraya, Wessex, Jordan and Jawa Power will contribute a total of RM3.2b or EPS of 40 sen for FY2025, and AI data centre will contribute full year RM800m (lowest among analysts' expectation) and RM400m for half year of Jan-June 2025, then YTLP may register full year net profit of RM3.6b or EPS of 45 sen for FY2025.

For FY2026, it will incorporate full year contribution from AI data centre and EPS may hit 50 sen or higher, given that Wessex will get substantially higher water tariff revision for the next 5 year regulatory period starting from 1st April 2025.

I do not want to over play the earnings prospects of YTL Power while the share price is surging up, but rather set a more realistic expectation of the "base" earnings based on my understanding and assumptions on the ongoing businesses.

The AI data centre division is the wild card that I have not been able to grab a firm knowledge on and hence not able to give a reasonable earnings projection. But when I compare the notes on AI data centre division given by analysts such as Ambank, Hong Leong and CIMB, all point to a net profit projection of at least RM800 million for the 1st phase of AI data centre to be ready in 2H 2024, and over RM1.2 billion net profit contribution a year from FY2027 once it is more developed.

Mr. OTB, yes the earnings outlook for YTLP is still looking good despite the efforts of local analysts to overplay the earnings "normalisation" of PowerSeraya.

As I wrote in my last article, PowerSeraya may see profits slightly lower in the current quarter ended 31 Mar 2024 compared to the Dec 2023 quarter, due to the lack of additional profit from long generation into the wholesale pool, after TPC was implemented since July 2023 and the cooler weather in Dec 23 - Jan 24 in Singapore that reduced the electricity demand spikes. That said, I still expect PowerSeraya to report reasonably good earnings of around SGD200 million in this quarter and next, which will contribute about RM700m of net profit to YTLP every quarter.

As CIMB analyst also pointed out in her report last week, Wessex is expected to turn around as early as this quarter ended 31 Mar 2024 and to report some profits from Q4 FY2024 quarter ended 30 June 2024 after the water tariffs are adjusted upwards from 1st April 2024.

Added with improved earnings contribution from Jordan Power and steady earnings from Jawa Power, YTL Power should be able to maintain a net profit of RM800m+ every quarter going forward from existing operations of PowerSeraya, Wessex, Jordan and Jawa Power. This will support an EPS of at least 40 sen a year for YTL Power, before new earning streams kicking in from data centre division, Yes 5G turning around, UK Brabazon property after handling over the keys to 1st batch buyers, WTE plant, digital bank, new 600MW hydrogen-ready CCGT of PowerSeraya from 2028.

Mr. OTB, the electricity tariff in Singapore is determined by EMA every 3 months, based on the vesting contract parameters determined every 2 years and based on prevailing crude oil prices and FX every 3 months.

The tariff for Jan-Mar 2024 has been determined in Dec 2023 for a 4.3% increase, which was inline with higher forward crude oil prices for these 3 months.

The vesting contract parameters were last reset in end of 2022 for the 2 years from Jan 2023 to Dec 2024, with the capital costs revised substantially to reflect the inflated costs for new builds and the WACC also revised up to reflect the higher interest rates. In short, the vesting contract non-fuel gross margin was revised higher to SGD52/MWh for all gencos using F-class CCGTs.

Going forward, the electricity tariff will be adjusted according to the prevailing crude oil prices and FX movements, and the non-fuel margin will continue to be revised every 2 years, with the next review by end of 2024.

With inflation still running high, we can expect capital costs to be set higher, and with interest rates at decades high, we can expect the WACC to be revised up slightly, both will result in a higher non-fuel margin to the gencos.

Crude oil prices are forecast to be higher in 2H 2024 with supply just matching demand, so all in I expect electricity tariffs in Singapore to move higher in months ahead.

You can see the wholesale prices are moving higher in March 2024 compared to the low in Feb 2024.

Haha Michael Chan, I like your style, always positive. Lets hope for Genting to soar to the moon in 2024!

@edwin387, to your question whether you should cut loss now and buy back cheaper, I do not have the answer, as I cannot predict how share price will move in today or next few days.

Nobody knows how low the share price will correct to, though technical charts sometimes may provide some guide, but it is not absolute.

You need to assess the risk of selling it now at a loss but cannot buy back lower, and the risk of holding it on to see it trending lower for weeks but win it back months later, and see which probability is higher.

Coreweave almost achieved a valuation of US$7 billion last Sept after it secured the multi-year deal with Microsoft.

https://finance.yahoo.com/news/coreweave-nears-stake-sale-fidelity-181908024.html

I believe the valuation given by some local analyst such as AMmbank Huey Ling or HL analyst for the AI data centre business of YTL Power is not without basis. I extract out the sentences written by Ammbank analyst in valuing the data centre business:

We believe that there are 2 parts in YTLP’s data centre (DC) in
Johor. First, the AI section, which would house the computing
processing infrastructure powered by Nvidia H100 Tensor
Core GPUs (graphic processing units) and the non-AI section,
which would cater to other customers.
 We ascribe a value of RM9.4bil to the AI data centre (Artificial
Intelligence DC), which is the average of 2 valuation methods.
For the non-AI DC, we attach a value of RM2.5bil based on a
price of RM25mil/MW on 100MW. This is based on the net
asset value of RM322.7mil for YTLP’s 12.5MW data centre in
Singapore.
 We value the AI DC between RM8.2bil (based on a price of
RM235mil/MW on a capacity of 35MW) and RM10.6bil (based
on the price of US$45,000/chip for 50,000 H100 chips). The
assumption of 50,000 H100 chips implies a capacity of 35MW
as a H100 chip uses 700W of power.
 Our assumption of RM235mil/MW is based on a 50% discount
to CoreWeave’s valuation of US$7bil on its 70MW data centres
in US. CoreWeave specialises in cloud hosting, using various
Nvidia GPUs such as H100s, A100s and A40s.
 Although YTLP’s DC is expected to have a capacity of 500MW
in total, we believe that it would come in stages. There is a
shortage of Nvidia H100 chips currently. As for the non-AI
section, we reckon that customers would come in phases.

Coreweave almost achieved a valuation of US$7 billion last Sept after it secured the multi-year deal with Microsoft.

https://finance.yahoo.com/news/coreweave-nears-stake-sale-fidelity-181908024.html

I believe the valuation given by some local analyst such as AMbank Huey Ling or Hong Leong analyst for the AI data centre business of YTL Power is not without basis. I extract out the sentences written by Ambank analyst in valuing the data centre business:

We believe that there are 2 parts in YTLP’s data centre (DC) in
Johor. First, the AI section, which would house the computing
processing infrastructure powered by Nvidia H100 Tensor
Core GPUs (graphic processing units) and the non-AI section,
which would cater to other customers.
 We ascribe a value of RM9.4bil to the AI data centre (Artificial
Intelligence DC), which is the average of 2 valuation methods.
For the non-AI DC, we attach a value of RM2.5bil based on a
price of RM25mil/MW on 100MW. This is based on the net
asset value of RM322.7mil for YTLP’s 12.5MW data centre in
Singapore.
 We value the AI DC between RM8.2bil (based on a price of
RM235mil/MW on a capacity of 35MW) and RM10.6bil (based
on the price of US$45,000/chip for 50,000 H100 chips). The
assumption of 50,000 H100 chips implies a capacity of 35MW
as a H100 chip uses 700W of power.
 Our assumption of RM235mil/MW is based on a 50% discount
to CoreWeave’s valuation of US$7bil on its 70MW data centres
in US. CoreWeave specialises in cloud hosting, using various
Nvidia GPUs such as H100s, A100s and A40s.
 Although YTLP’s DC is expected to have a capacity of 500MW
in total, we believe that it would come in stages. There is a
shortage of Nvidia H100 chips currently. As for the non-AI
section, we reckon that customers would come in phases.

This is another example how AI data centre deal was announced. It was a multi-year multi billion deal secured by CoreWeave with Microsoft.

https://www.cnbc.com/2023/06/01/microsoft-inks-deal-with-coreweave-to-meet-openai-cloud-demand.html

@edwin387, it is okay if you have bought YTL Power at around RM4.00, the timing may be unfortunate for you as the share price is under correction.

However, always go back to fundamentals and look back why you put your money into this stock in the first place. It is the good prospects of the company earnings and tremendous upside from its AI data centre venture with Nvidia. There may be a lull in terms of good news around the company in the past few weeks and next few weeks, and this gives the opportunity to the bears to press down the share price. But I believe over the longer term, the share price will go up past RM4.00 again when steady quarterly earnings kick in and data centre division starts to contribute earnings to YTLP.

There is always risk in stock investment and there is always blips along the way for a long rally of a stock. Just stay invested and ride through the correction phase.

It is normal for AI data centre deals to be announced without much detail as these are very sensitive data.

It suffices to say where the AI data centre will be located and total investment value, and most importantly the data centre will use the highly sought-after Nvidia H100 GPUs and software. Industry players will know how significant it is. CoreWeave is a good example.

https://venturebeat.com/ai/coreweave-came-out-of-nowhere-now-its-poised-to-make-billions-off-of-ai-with-its-gpu-cloud/

It is normal for AI data centre deals to be announced without much detail as these are very sensitive data.

It suffices to say where the AI data centre will be located and total investment value, and most importantly the data centre will use the highly sought-after Nvidia H100 GPUs and softwares. Industry players will know how significant it is. CoreWeave is a good example.

https://venturebeat.com/ai/coreweave-came-out-of-nowhere-now-its-poised-to-make-billions-off-of-ai-with-its-gpu-cloud/

No doubt Empire Resorts or Resorts World Catskill is lacking behind in terms of market share for mobile betting, but as shown in the article, the prospect is good and the pie can be large enough for Empire Resorts to achieve its target market share and help it to turn around.

Posted by Michael_chan2022 > 57 minutes ago | Report Abuse

https://rwcatskills.com/resortsworldbet/
Resorts World Catskills

https://theedgemalaysia.com/node/704256
Genting’s Resorts World Bet achieved US$500,000 wagering revenue in February — report

Sources on the ground indicated that the 1st phase of data centre for SEA Group at Kulai has just been completed and will start contributing some profits to YTL Power from Q4 FY2024.

The 1st phase of AI data centre is on track for completion in 2H 2024.

Mr. OTB, yes I saw the latest update report from CIMB last Friday.

Its earnings projection for FY2024 indeed does not include any profit contribution from data centre division, the net profit projection of RM3.15 billion for FY2024 comes from contributions from existing ongoing businesses including PowerSeraya, Wessex, Jordan and Jawa Power, and some losses from Yes 5G.

CIMB projects a net profit contribution of about RM400 million from the data centre division for FY2025, ramping up to about RM1.0 billion in FY2026. I cannot say whether this is too bearish or too bullish on the data centre division, but it looks similar to projections from RHB analyst who projected a net profit contribution of up to RM1.2 billion from the data centre division from FY2027.

Of note is the low earnings projection from ongoing businesses for FY2025 and FY2026. CIMB analyst is obviously very cautious on the PowerSeraya earnings prospects, and I think is over bearish on the "normalisation" of earnings in PowerSeraya towards 2026. She may be right that PowerSeraya might have peaked in Q4 FY2023, when pool prices were spiking high and PowerSeraya benefited from selling extra long generation into the pool and earned extraordinary profits to the tune of SGD30 million per quarter, as per what Sembcorp had indicated too.

But I think PowerSeraya will continue to deliver good profits of SGD200-220 million per quarter going forward until 2026, purely based on the retails electricity market and vesting contracts which now offer a gross margin of SGD60/MWh. PowerSeraya's exposure to the wholesale market remains below 5%.

Furthermore, Wessex is expected to turnaround from April 2024 after it secures a new round of water tariff hike for the year beginning from 1st April 2024 to 31 Mar 2025. Interestingly, CIMB report says Wessex will impose at least 11% increase in average water bills from 1st April 2024, this is much higher than I expected (to be around 3.5% to 7.5%).

Wessex is expected to achieve total revenue of GBP560 million for FY2024 ended 31 March, so a 5.5% rise in water tariffs will increase its revenue by GBP31 million for FY2025 and a 11% increase in water tariffs as CIMB expected will increase Wessex' revenue by GBP62 million for FY2025.

Sources indicated to me that today's selling could have been due to one investment bank dumping the hedged mother shares for a call warrant expiring today.

It was trying to press down the closing price so that the settlement price for the call warrant will be lower and also it does not intend to issue any new call warrant on YTLP.

This is good to me as less call warrant will be issued and less impact from these call warrant issuing banks on YTLP share price movements

YTL Power share is going through consolidation now after surging some 60% YTD due to aggressive foreign buying in early January 2024. It is hence entirely normal for early investors including some short term foreign funds to lock in some profit, but I do not believe these funds have completely exited, as seen from statistics that foreign funds bought in a total of RM150m worth of YTL Power in the month of February, ahead of the inclusion of YTL Power into MSCI.

Many investors have missed out on the rally of YTL Power, including the majority of local analysts and local institutional funds. It is only natural for them to hope for a bigger correction in YTL Power share price in order to get into this promising company.

I do not know how much and how long the correction may take for YTL Power share price, so I don't really bother to look at the daily share price movements, but always fall back to fundamentals.

Naysayers and those who missed out earlier on YTL Power are telling all sorts of negative comments like over-valued counter lah , big funds dumping lah, AI data centre venture with Nvidia has no detail announced lah, YTL Power earnings will see big drop in earnings from FY2025 lah, blabla bla.

I would just ignore such noise and get back to the facts and figures:

YTL Power remains the cheapest utility stock in Bursa with forward PER of just 9.0x, compared to over 20x PER for Tenaga, PetGas, GasMalaysia, Dialog etc.

YTL Power is set to deliver another record earnings for FY2024 ended June with net profit of over RM3.0 billion from RM1.9 billion in FY2023, even the most conservative Maybank analyst projected a net profit of RM2.986 billion for FY2024. That's for a superb 57% increase in net profit y-on-y. Which big cap in Bursa could possibly deliver such a huge profit jump in a year??

With so many new projects taking off in months to come, YTL Power earnings will continue to grow in FY2025 and beyond:

1) Wessex Waters to turn around from April 2024
2) Jordan Power to deliver full PPA earnings from early 2024
3) Yes 5G to break even by end 2024
4) digital bank to start contributing profit in 2-3 years or by 2027
5) WTE plant to start contributing profit from 2027
6) PowerSeraya new 600MW hydrogen ready CCGT to start contributing profit from 2028
7) UK Brabazon property project to contribute meaningful profits from 2025
8) 1st phase data centre with SEA Group to start contributing profit from 2H 2024
9) 1st phase AI data centre with Nvidia to start contributing profit from end 2024
10) potential clinching of new solar power project in Malaysia from new LSS tenders

There may be a lull of 2-3 months before the new profit contribution can be seen in 2H 2024, so it gives an opportunity for shorties and those who want to buy cheaper to smear the image of YTL Power and to play down on its earnings prospects.

I would just stay put with my holdings on YTL Power and may add positions if share price falls further to unreasonably cheap levels.

Good summary, MR. OTB.

Agreed that AI data centre business will drive YTL Power to new highs in next 2 years.

@Permutation, Genm has more near term catalysts while Genting is more undervalued and has greater long term upsides.

Genm for one announced a better than expected quarterly result for Q4 FY2023 while Genting disappointed with a weak result dragged down by impairments at Genting Singapore.

While the outlook for both Genting Highlands and Genting Singapore are bright as both Malaysia and Singapore have allowed visa free travels from China and India, I am not sure if there will be more impairments at Genting Singapore in coming quarters.

Next, Genm will have a good chance to dispose off its Maimi land in 2H 2024 when US Fed starts cutting rates, that will be a good catalyst to Genm share price, I believe.

New York city council will be launching the RFP to solicit interests for 3 new full casino licenses and Genm shall stand a good chance to clinch one of the licenses. As I calculated in my article, the potential from a new casino license in New York is huge and that will be another catalyst to Genm.

Genting long term is still very good, underpinned by Sentosa 2.0 expansion by Genting Singapore. I expect Genting Singapore earnings to expand by at least 40% to achieve EBITDA of close to SGD1.8b - 2.0 billion by 2030 when the expansion completes.

Whether Genm or Genting is better, I will leave it to you to decide one that suits your investment horizon. I have both.

@Permutation, I suggest you consult Mr. OTB on Yinson as he has done extensive studies on this company, while I have not.

decent closing today for YTL Power with more muted trading volume.

It is good to see that YTL Power shares are cooling off a little bit lately, as a slew of good news and good developments at the company has sparked a major re-rating of the stock:

1) Inclusion into KLCI component index in early Dec 2023
2) announcement of collaboration with Nvidia to develop AI data centres in mid Dec 2023
3) winning the EMA tender for development of a new 600MW hydrogen-ready CCGT in Jan 2024
4) announcement of inclusion into MSCI in mid Jan 2024 and official inclusion on 29 Feb 2024
5) approval for the Brabazon property development project with enlarged plan of 6,500 homes and 4m sf commercial area

Any long rally of a stock will need a pause for it to consolidate gains, also to allow some early investors to take some profits and for late comers to get into the stock on profit taking.

If we take a longer term view of 12 months-24 months, this stock has been performing in a fantastic form, way better than our initial expectation. So it is entirely normal for people to take profit and adjust their portfolio.

But if I look around Bursa stock universe, it is really hard to find another stock with better prospects and earnings certainty than YTL Power & YTL Corp, big cap, liquid, high trading volume, cheap valuation, etc all favoured by foreign funds.

If we think foreign funds will come into Bursa in a big way and Bursa will see a bull run in 2024 and 2025 as envisaged by iCap Mr. Tan Teng Boo (who expects KLCI to test 2,500-3,000 points in next 2-5 years), which stocks would foreign funds look at favourably?

Tenaga?? no, latest Q4 very weak, Manjung plant down on unplanned outage till 2024 end/2025, high receivables over RM10 billion, tight cashflows and working capital, super high capex of over RM50 billion in next few years, high borrowings and doubling interest expenses from higher capex spending, etc.

bank stocks? Maybank and RHB Bank maybe for decent dividend yield of 6% p.a. but growth is limited hence share price upside is limited

other utilities stocks? TM? definitely no as its unifi business is seeing huge threats from 5G operators who are offering cheaper and faster wifi solutions

Pet Gas? also no due to high valuation of over 30x PER

Dialog? maybe as Q4 earnings are solid but still valuation is double of that for YTLP

what else? IHH for 35x PER?

any other stock traditionally favoured by foreign funds?

Agreed that US dollars are high against ringgit now, and it may come down later this year when US Fed starts cutting rates.

FX only affects the paper accounting value, so I won't bother much. More importantly it is for Genm to win one of the 3 casino licences in New York.

@Jack Khan, you are probably right there.

As Genm owns 100% equity stakes in Resorts World New York City at Queens which I believe will house the new New York full casino when the new license is awarded, the capex required will not be too big, reportedly at around USD1.0 billion, half of which is for the bid bond.

Genting group has already raised sufficient fund for the US$500 million bid requirement, it may probably spend another USD500m to upgrade the facilities at RWNYC in order to roll out full casino products.

To enhance its bid, I do not rule out the possibility of GNM robing in a local partner to win one of the full casino license.

On the potential earnings contribution to YTLP from the Brabazon project, I have previously not included it as the master plan was not approved yet. Now the plan has been approved (on 29 Feb 2024) and it entails exactly the sizing as envisaged in the 2023 Annual Report.

Without assess to more detailed development plan, I will just do a quick estimation here on the potential earnings contribution from the Brabazon project to YTLP.

The approved plan envisages development of 6,500 new homes and 4 million sf of commercial floor area in Bristol. Using the national average house pricing in the UK of about GBP275,000, I estimate that the total GDV for the 6,500 new homes may amount to GBP1.8 billion. Using a rough gross profit margin of 25%-30%, I estimate that total development profit for the 6,500 new homes may amount to GBP500 million over the next few years.

Assuming development over 10 years, average gross profit will be GBP50 million a year. Applying UK corporate tax rate of 25%, net profit contribution to YTLP may come to GBP37.5 million or RM225 million a year over next 10 years.

Then for the 4 million sf of commercial area, the potential rental income may be huge too. Online checks show that Bristol commercial / office rental rates are between GBP25-30 psf per annum. So for the proposed 4 million sf of new commercial area, the potential gross rental income may amount to GBP100 million to GBP120 million per annum. Deduct off 25% for miscellaneous charges for property management, the net property income may come to GBP80 million to GBP90 million per annum. Again deduct off 25% corporate tax, net earnings contribution to YTL Power may be GBP60 million to GBP67.5 million, or RM360 million to RM405 million a year to YTL Power.

That's my rough estimation - RM225 million a year of net profit contribution to YTL Power from this project, increasing over time to as much as RM630 million a year when the commercial area is fully developed. After all the new 6,500 homes are delivered, the recurring income will be from the commercial area which may contribute over RM400 million of net rental income to YTLP every year.

@Probability, thanks for highlighting the approval news of the Brabazon project in the UK.

This property development project has always been under YTL Power, as YTLP management has acquaintance with the Bristol council in dealings for Wessex Waters which is located nearby in Bath.

I think YTL Power has 100% equity stakes in this Brabazon project, as stated by the following statements in YTLPower 2023 Annual Report:

"Brabazon
YTL Developments UK Limited (“YTL Developments”), a wholly-owned
subsidiary of YTL Property UK, is undertaking one of the
UK’s largest master planned developments, located on the former
Filton Airfield site. Brabazon Bristol is a 380-acre mixed-use urban
development and the Group’s first UK property development
project.
Awards won this year include Residential Project of the Year (36
Homes and Over) – Michelmores Property Awards 2023;
Residential Developer – Insider South West Property Awards
2023; and Developer of the Year – Bristol Property Awards 2022.
Masterplan Densification
Planning approval from South Gloucestershire Council is currently
pending for the proposed update to the development’s Masterplan.
The approval will allow the new Masterplan to deliver up to 6,500
residential homes, student accommodation units, 4 million sqft of
commercial floor area and approximately 1 million sqft of
educational and community facilities."

I believe that the construction work for this massive Brabazon property development project will be undertaken by YTL Corp's construction arm. The total construction work may be worth over a billion pounds (>RM6.0 billion) to be awarded to YTL in next few years.

Genm is under-valued. The value of either its US assets or RWG alone is higher than Genm's market cap now.

https://klse.i3investor.com/web/blog/detail/dragon328/2024-03-01-story-h-187411830-Genting_Malaysia_RWG_Soaring_High_in_the_Year_of_Dragon

For leisure read

https://klse.i3investor.com/web/blog/detail/dragon328/2024-03-01-story-h-187411830-Genting_Malaysia_RWG_Soaring_High_in_the_Year_of_Dragon

200 million shares traded at RM3.95 in the last minute, big big funds.

Looks like big chunks of shares changing hands between major shareholders and foreign funds, or local institutions and foreign funds, besides call warrants issuing banks dumping all they had to press down closing price.

crazy volume of over 265 million volume transacted in last minutes